Browsing by Subject "Lottery contest success function"

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    Perseverance and suspense in tug-of-war
    (Elsevier, 2021-01-06) Karagözoğlu, Emin; Sağlam, Hüseyin Çağrı; Turan, A. R.
    We study a tug-of-war game between two players using the lottery contest success function (CSF) and a quadratic cost (of effort) function. We construct a pure strategy symmetric Markov perfect equilibrium of this game, show that it is unique, and provide closed-form solutions for equilibrium strategies and values. In stark contrast to a model of tug-of-war with an all-pay auction CSF, players exert positive efforts until the very last battle in this equilibrium. We deliver a set of empirically appealing results on effort dynamics.